Pax Christi USA signed onto the following letter being circulated by Jubilee USA. The letter was delivered to the White House today.
Dear President Obama,
As you consider the candidates to serve as the Chair of the U.S. Federal Reserve System, know that you are in our prayers. We offer you the perspective of the national and local faith community that daily works to defend and advocate for those living in poverty around the world. In the course of our work we have had the chance to witness firsthand the effects of U.S. Federal Reserve policies on communities in the United States and in the global south.
Because we know that the actions of the next Chair of the Federal Reserve will powerfully impact the lives of many who cannot voice their views in this debate, we lift our voices now. Consequently, we ask that the following considerations be part of your discernment process:
First, we believe the Fed chief needs to have a strong and proven track record as a staunch supporter of the role of regulation in limiting excessive risk-taking by financial institutions. Deregulatory policies have had negative effects on those living in poverty everywhere, including in countries with GDPs smaller than some Wall Street banks. The Fed’s role in setting the tone for strict regulation of the banking and non-banking sectors, including so-called “shadow banks,” is crucial, and has been reinforced by the recent financial reform legislation of 2010.
There is mounting recognition that the repeal of laws separating investment and commercial banking has severely damaged the financial system. The next Fed Chair should commit to reestablish this separation.
Second, the next Fed chair should maintain an appropriate distance from regulated companies with full transparency and disclosure. As the U.S. government’s lead watchdog of Wall Street, he or she should convey complete independence from such companies in the design and enforcement of necessary regulations.
Third, the new Chair of the Federal Reserve must have the global vision to protect the poorest communities from food supply shocks. The impact of financial deregulation on food price volatility is a major concern to us. We recognize that changing weather conditions and poor harvests play a significant role in food prices. Yet, numerous studies have shown the impact that the massive expansion of investment in under-regulated commodities derivatives through commodity index funds and exchange-traded funds by non-traditional investors has had upon the price of food and energy commodities, especially since 2005. Congress took some positive steps to increase the transparency of those markets and to limit excessive speculation under the Dodd-Frank Wall Street Reform and Consumer Protection Act. But these essential reforms have yet to be fully implemented.
We thank you for your attention in this matter.